The measure of profit must account for all factors of productivity, i.e., revenues, costs, capital, and the cost of capital.

A distinction should be made between capital generating current revenue (operating capital) versus potential future revenue (strategic capital). For example, inventory associated with product expected to be sold within the next year (which could be considered "operating capital") should have a capital charge against current profit. Inventory of parts for a plant under construction (which could be considered "strategic capital") would not have a charge as part of the profit measure.

The overall profit measure should be disaggregated into contribution components for each level of 'stand-alone' business units, i.e., each group of operating entities that have a relatively minor impact upon each other's business activities or financial results.

This measure should be objective and simple enough to be understood by middle managers in marketing or operations. Individual managers should be able to clearly relate their activities to the financial elements of their business unit's contribution to corporate profitability.